Changes to CJRS

On Friday 29 May, Chancellor Rishi Sunak announced significant changes to the Coronavirus Job Retention Scheme.

Flexible furloughing

From 1 July 2020 employers can bring employees back to work on a flexible part-time basis, rather than the current ‘all or nothing’ basis. This is earlier than the 1 August date previously announced.

Where an employee returns on this flexible basis, the CJRS can still be used for the employee’s normal hours they do not work.

Example

Nick normally works a 40 hour week and is paid £2,000 per month.

  • His current furlough pay = £2,000 x 80% = £1,600 per month

From 1 July, Nick returns on a part-time basis, working 2 days, or 16 hours per week.

  • Nick’s employer pays = 16/40 x £2,000 = £800 per month
  • The CJRS pays = 24/40 x £2,000 x 80% = £960 per month

Nick will now receive a total of £1,760 per month.

An obvious issue that needs to be resolved is how to determine ‘normal hours’. More information on this is needed and will be published by the government on 12 June.

Scheme closed to new entrants from 30 June

In order to benefit from CJRS from 1 July onwards, an employee must have been furloughed for at least a full 3 week period by 30 June.

  • Employers will no longer be able to furlough any employee that hasn’t already completed a 3 week furlough period by that date.
  • The last date an employer can furlough an employee for the first time is therefore 10 June 2020.
  • CJRS claims for periods up to 30 June 2020 must be made by 31 July 2020.

A number of employers have furloughed staff from March but have not yet made a claim, preferring to make one claim for the entire furlough period to reduce the compliance costs involved.

This has particularly been the case for small businesses where only directors and their families are employed and they have been able to manage on cash reserves over the past few months. All such businesses will now need to submit claims for the period to 30 June by 31 July.

Additional points

  • From 1 July claim periods can no longer overlap calendar months. The claim must fall wholly within a calendar month.
  • For example, claims may have previously been made from 6 April to 5 May and 6 May to 5 June. The next claim will need to be made for the period 6 June to 30 June, and thereafter must fall wholly within the calendar month.
  • It will be possible to make more than one claim within a month but each claim period must be at least 7 days long.

Changes to employer contributions

Up to 31 July the existing government support remains unchanged. The government will pay 80% of gross salary up to the £2,500 monthly cap plus employer’s NIC and a pension contribution of up to 3%. There remains no obligation on the employer to pay anything.

From 1 August 2020 the amount employers can claim under the scheme is reducing.

  • From 1 August – the employer will pay the employer’s NIC and pension, with government still paying 80% of gross salary.
  • From 1 September – the employer will pay the employer’s NIC and pension, plus 10% of gross salary; the government will pay 70% of gross salary. The monthly cap the employer can claim under CJRS becomes £2,187.50.
  • From 1 October – the employer will pay the employer’s NIC and pension, plus 20% of gross salary; the government will pay 60% of gross salary. The monthly cap the employer can claim under CJRS becomes £1,875.
  • The CJRS is due to close on 31 October.

Whilst the amount the employer can claim reduces from 1 August, the employee will continue to be entitled to the full 80% of their salary, subject to the previous £2,500 cap.

Get in touch

For more information on the Coronavirus Job Retention Scheme, or to make a claim, get in touch with a member of our team on 01903 234094.